RETAIL: Thanks to the holiday shopping season, the Texas Retail Outlook Survey showed that retail sales jumped 6.6 points in December.Labor market indicators reflected slightly faster employment growth and longer workweeks. The employment index edged up 2 points, and the hours worked index rose 8.5 points and moved back into positive territory. However, retailers’ perceptions of broader economic conditions were less optimistic in December.

COMMENTS:Lower energy prices have meant “very strong” business for some restaurant/bars and lower energy costs for some transportation companies. But most of the 24 industry groups surveyed noted concern about low oil prices or already have seen signs of decreased demand for their products and services. “We think oil prices in the $50 per barrel range will definitely change the residential real estate market by mid-2015,” one real estate company executive said. “The extent of the impact will depend on how long oil stays below $70 per barrel.”

FUTURE: Executives at service-sector companies, including retailers, showed less optimism regarding future business conditions and their company outlook.

Texas produces more than 11 percent of all goods made in the United States, ranking second after California.

PRODUCTION: The production index — a key measure of manufacturing conditions — jumped from six in November to 15.8.

OTHER: Other measures of manufacturing activity were mixed in December. The shipments index climbed to its highest reading in five months, the capacity utilization index rose and the employment index held steady. But the new orders index fell 4.3 points and the growth rate of new orders index, which the Dallas Fed has said is the most accurate reflector of national economic trends, declined 2.7 points — both suggesting moderating demand.

COMMENTS: Executives at a variety of manufacturing firms, including metal, wood, chemical and electrical equipment manufacturers, either expect lower oil prices to hurt their business or are worried about the potential impact.

GENERAL BUSINESS: Indexes for general business conditions and company outlooks now and six months ahead did not change much from November.

Richard Fisher, president of the Federal Reserve Bank of Dallas, voted against the central bank’s monetary policy statement issued today in his last meeting as a voting member of the central bank’s policy setting committee.

It was Fisher’s ninth dissenting vote since he became head of the Dallas Fed in 2005.

Fisher, who is a voting member this year, will retire on March 19. He was one of three dissenters in today’s vote. The two others were Minneapolis Fed president Narayana Kocherlakota and Philadelphia Fed president Charles Plosser.

Fisher’s view of the performance of the U.S. economy and how that effects the nation’s monetary policy continues to be at odds with the majority of other central bankers.

Fisher is traveling today and not available for comment. However, he couldn’t have said much anyway since he’s still under a black-out period of Dec. 9 through Friday around the Federal Open Market Committee meeting.

Fisher dissented because he thinks that “while the Committee should be patient in beginning to normalize monetary policy, improvement in the U.S. economic performance since October has moved forward, further than the majority of the Committee envisions, the date when it will likely be appropriate to increase the federal funds rate,” according to the statement.

He voted against today’s statement even though the central bank removed the word “considerable” from today’s statement as to the estimated amount of time to keep short-term interest rates very low after it ended its stimulus program in October. Earlier this month, Fisher told me and a handful of other reporters that “the logical next step for me would be to take the word out” of the next committee statement.

Instead, today the Fed said “it can be patient in beginning” to return to a more normal monetary policy. The Fed has kept rates near zero since 2008 to help boost the economy and lending by banks.

Kocherlakota dissented because he thought the FOMC’s decision “in the context of ongoing low inflation and falling market-based measures of longer-term inflation expectations, created undue downside risk to the credibility of the 2 percent inflation target,” according to today’s FOMC statement. Plosser thought “the statement should not stress the importance of the passage of time as a key element of its forward guidance and, given the improvement in economic conditions, should not emphasize the consistency of the current forward guidance with previous statements.”

Inflation has remained below the Fed’s target rate of 2 percent. Today, the government said the U.S. Consumer Price Index, which is an indicator of the inflation rate, declined 0.3 percent in November due to lower gas prices.

Richard Fisher, president of the Federal Reserve Bank of Dallas, last night called for the nation’s central bank to start letting its massive securities holdings run off as the bonds mature as a next step in returning to a more normal monetary policy.

Fisher wants the Fed to revisit its plan to stop reinvesting the proceeds of maturing Treasury and mortgage bonds into new holdings after it begins to raise short-term interest rates. Yesterday, he said current conditions are more favorable for that to happen, but he’s not sure he can convince his fellow Fed bankers.

“To me, that’s a logical sequence to follow,” Fisher said in a speech at a Dallas Business Club event. “I think the markets would accommodate it” and wouldn’t affect yields, he said.

Such a move would be “timely” and in line with the Federal Reserve’s “normalization principles” set out in September, said Fisher, who votes this year on the Fed’s policy setting committee. In support of his idea, he noted that rates are lower, Congress has called for a lighter hand by the Fed and there’s a shortage of collateral in the marketplace.

In October, the Fed ended the stimulus program it started in 2008 by no longer buying bonds. Overall, the Fed bought $1.7 trillion of Treasuries and asset-backed securities were purchased under its third bond-buying round — on top of $2 trillion in the first two rounds.

Fisher also thinks the central bank is “closer to a period when we might raise [interest] rates than the market consensus [of mid-2015] … based on how we’re doing in the real economy,” he said in a question-and-answer session with reporters after his speech last night. The U.S. unemployment rate of 5.8 percent in October is close to the Fed’s long-term sustainable rate of between 5.2 percent and 5.5 percent, he said.

Fisher was against the Fed’s last round of bond buying and has called for the Fed to start raising interest rates earlier than the targeted time frame of mid-2015 because the economy has improved. The U.S. central bank has rates near zero since 2008 to spur hiring and boost the economy.

The U.S. economy continued to expand in October and November, though there’s some concern about the impact of falling oil prices going forward, according to the Fed’s latest Beige Book released yesterday. Other recent reports, including economic confidence, manufacturing output and hiring outlooks, also point to steady economic growth.

Fisher said he realizes his ideas are “outside the box,” Fisher said. “But in my final four months at the Fed, I plan to urge my colleagues to think more outside the box in this and other ways in the interest of securing sound money, a sound economy and sound markets.”

Fisher, 65, has said he’ll retire on March 19 after 10 years as head of the Dallas Fed. Fisher’s last Fed policy setting committee on Dec. 16-17.

At next month’s Fed policy setting committee meeting Fisher said he won’t push an issue he’s brought up before: taking the word “considerable” out of the committee’s statement. In previous statements, the committee has stated a plan to maintain current short-term interest rate levels for a “considerable time” after the Fed’s bond-buying has ended.

Fisher said while it’s not “meaningful,” … “the logical next step for me would be to take the word out” of the next committee statement.

A Valero oil refinery in Three Rivers, Texas. Some companies in the Federal Reserve's Dallas district are worried about the effect of lower oil prices on future demand for their products and services. (Michael Stravato/The New York Times)

Economic activity in Texas and nearby areas expanded at a “solid pace” in October and November, though there’s some concern about the impact of falling oil prices going forward, according to data released today by the Federal Reserve.

Overall, reports from the 12 Federal Reserve districts across the country indicate the U.S. economy continued to expand.

The Fed’s Beige Book economic snapshot is the latest in a series of national data showing that the U.S. economy continues to steadily improve. Recent reports of economic confidence and manufacturing indexes are up and hiring outlooks are strong.

Here are some of the key reports for the Fed’s Dallas district, which includes Texas, northern Louisiana and southern New Mexico for the past six weeks ended Nov. 24:

Agriculture: Drought conditions remained severe in some northern parts of Texas, despite recent rainfall. Yields for most spring crops were well above 10-year averages.

Construction and real estate: The housing market softened slightly, with slower growth in single-family home sales due to seasonal changes and higher home prices. Apartment, office and industrial leasing remained strong. Outlooks were mostly optimistic, but some businesses are worried about price affordability and the potential effects of higher mortgage rates and lower oil prices on future demand.

Energy: Demand for oilfield services remained robust. Growth in Texas drilling activity occurred only in the Permian Basin of west Texas. Companies noted they’re revising budgets and planning less capital expenditures in response to lower oil prices.

Financial services: Overall loan demand expanded slightly. Lenders noted that year-end figures point to solid growth for 2014, though lower oil prices could curb demand by companies in the oil and gas industry.

Labor market: Employment generally held steady or increased. Companies continued to report trouble finding skilled workers, especially in booming oil and gas areas. Staffing services demand in Dallas–Fort Worth and Houston continued to be strong for workers at all skill levels.

Manufacturing: Manufacturing activity continued to increase across most industries. Some lumber and brick businesses reported a slowing pace in demand.

Other services: Legal work related to mergers and acquisitions picked up, while demand for legal services from oil and gas companies slowed in response to uncertainty regarding future oil prices. Trucking firms reported strong demand, but cargo volumes were flat from last year. Shipping cargo volumes rose, especially for steel.

Prices: Selling prices were stable or rose slightly for most firms. The price of crude oil fell sharply in the last a several weeks, leading to significantly lower gasoline and diesel prices for consumers and some businesses.

Retail sales: Retail and automobile sales reports were mixed. Three large retailers said demand in Texas continued to outperform the national average.

Employees at Cornea Associates of Texas laughed after taking a selfie during a painting party at Pinot's Palette in Dallas in September. The company was voted one of The Dallas Morning News' top 100 places to work in North Texas. (Tom Fox/The Dallas Morning News)

Texas companies are more optimistic about the future and are taking extra steps to recruit and retain employees in an increasingly tight labor market.

That’s according to the results of several extra questions asked to Texas businesses about their employment expectations by the Federal Reserve Bank of Dallas this moth. the results were released today along with the Dallas Fed’s service sector and retail sales outlook surveys for November.

Texas’ unemployment rate, adjusted for seasonal variations, fell to 5.1 percent in October. The rate for Dallas-Fort Worth is even lower at 4.8 percent, but it’s not seasonally adjusted.

More Texas business executives plans to increase their hiring in the next six months to 12 months. The 48 percent that said so was a higher figure than six months ago and nine months ago. In addition, fewer executives plan to decrease employment.

Seventy-four percent of executives said they’re having a hard time finding qualified workers in November vs. six months earlier (70 percent). They said the biggest reasons are (in order): lack of technical skills (58 percent), an insufficient number of applicants (47 percent) and a lack of experience (40 percent).

In response, more Texas business executives in November than in May said they’re taking special steps to recruit and retain their employees. For example, 63 percent of executives said they’re intensify recruiting efforts, including advertising, offering hiring bonuses and using staffing agencies to help hire.

Companies also are taking these other steps: increasing wages and benefits (53 percent), increasing variable pay, such as bonuses (34 percent) and improving work conditions (26 percent).

The state’s service sector represents nearly 70 percent of the Texas economy and employs about 7.6 million people.

REVENUE: The services revenue index — a key measure of industry conditions — jumped 11.4 points in November from October.

OTHER: Service sector employment rose slightly this month. Company outlooks remained optimistic.

RETAIL: The Texas Retail Outlook Survey held steady, with the retail sales index unchanged in November.

FUTURE: Companies in the service sector and retail were more optimism about the next six months.

COMMENTS: Some service companies noted that lower energy prices are hurting business. Others noted that costs are increasing for health care coverage and some supplies, such as beef and chicken at restaurants.

Richard Fisher, president of the Federal Reserve Bank of Dallas, said he would be comfortable running inflation a bit above the 2-percent target for a while as long as long-term expectations remain stable, according to an interview with the Financial Times.

The latest annual U.S. inflation rate was 1.7 percent for the 12 months through October. That’s below the Federal Reserve’s target rate of 2 percent.

But Fisher, one of the Fed’s most hawkish policymakers, is not worried about U.S. inflation. Policy hawks typically are more worried about inflation, than other economic indicators such as full employment.

“I can see us lifting up gradually to the 2 percent target,” Fisher said yesterday in the Financial Times. “I think we should have a symmetrical view around 2 percent. A little bit below doesn’t bother me, particularly if it’s supply driven. A tiny bit above, as long as expectations stay in place, wouldn’t bother me.”

Fisher has called for the Fed to start raising interest rates earlier than the targeted time frame of mid-2015 because the economy has improved. The U.S. central bank has rates near zero since 2008 to spur hiring and boost the economy.

However, Fisher told the Financial Times that Fed policymakers ideologically are “much closer together” today than in the past on monetary policy.

“Right now it’s really a question of when [to raise rates],” he said. “Even I wouldn’t advocate moving today.”

PRODUCTION: The production index — a key measure of manufacturing conditions — declined 7.7 points from October, but remained positive.

OTHER: Nearly all other measures of current manufacturing activity also reflected slower growth this month. The new orders index dropped 8.6 points and the capacity utilization index fell 8.3 points and the “growth rate of new orders” index, which the Dallas Fed recently said was the most accurate reflector of national economic trends, sunk 10.3 points. Labor market indicators were flat from October.

COMMENTS: Several manufacturers across industries reported steady business trends in October and November. Others noted that falling energy prices are having either having a negative effect on their business of creating uncertainty.

GENERAL BUSINESS: Perceptions of broader business conditions remained positive this month, while outlooks were less optimistic. Indexes for future manufacturing activity held steady or improved.

The Federal Reserve Board of Governors in Washington, D.C., today named Renu Khator, chancellor and president of the University of Houston, chairwoman of the Federal Reserve Bank of Dallas for 2015. She will replace Mike Ullman, chief executive of J.C. Penney Co.

The Fed also named Matthew K. Rose, executive chairman of BNSF Railway Co. in Fort Worth, deputy chairman of the Dallas Fed for 2015.

The changes, while expected, come as Dallas Fed president Richard Fisher has announced he will retire on March 19 after 10 years at the helm. The Dallas Fed has established an advisory group and retained executive search firm Heidrick & Struggles to help it find Fisher’s replacement. The Dallas Fed’s board of directors, along with the Fed Board of Governors, will make the final decision.

Khator:

The Fed first named Khator to the Dallas Fed board in January 2011.

She is the University of Houston System’s first female chancellor and the first Indian immigrant to lead a U.S. comprehensive research university. Since 2008, she has overseen the UH System’s more than 65,000 students and a budget of over $1.3 billion.

Khator also is a noted scholar in the field of global environmental policy and has published numerous books and articles on the subject.

Rose:

Rose joined the Dallas Fed’s board this year.

He was CEO of BNSF from 2000 to January 2014, when he became executive chairman. BNSF is one of North America’s largest freight transportation companies, operating 32,500 route miles of track in 28 states and two Canadian proviences.

Rose is a member of the Business Roundtable, a conservative public policy group of CEOs of major U.S. corporations.